Brodosplit, the Croatian shipbuilder, has filed a provisional bankruptcy statement as the company seeks a solution to a financial crisis caused by EU financial and banking sanctions against Russian institutions. Croatia’s largest industrial entrepreneur, the shipyard and its parent company, DIV Group, explain that this is not an operational problem, but a loss of construction financing and the impossibility of completing a bridge solution. financial with the government.
The problem began for Brodosplit in early April when the EU moved to tighten financial sanctions on Russia and included in the restrictions VTB, a Russian-owned bank and loan network, mostly state-owned. Brodosplit is building two commercial projects for which it required 150 million euros ($ 159 million). DIV promised to provide 30 million euros and the shipyard took out loans from VTB for a total of 120 million euros. In March, the shipyard withdrew 82 million euros from the Russians when loans were blocked as part of sanctions. The restrictions imposed on VTB due to the war in Ukraine prevented the payment of the remaining 38 million euros.
Initially, DIV intervened to provide additional financial support, but they turned to the government to propose a bridge loan to the shipyard to finance the completion of the two ships. DIV says it also expanded financially by supporting the shipyard. Brodosplit reports that work on one of the two projects is nearing completion and estimates that it could be completed with an additional € 500,000, while the second project requires approximately € 8 million to complete the ship to be delivered. at the end of the year.
DIV reports that it has held intensive talks with the Croatian Bank for Reconstruction and Development (HBOR) to secure a loan for Brodosplit, but has not received a response from the government to its proposal. He emphasizes that a grant is not requested, but a loan.
“I hope they haven’t given up on us,” a Brodosplit director told Croatian media over the weekend. “We will survive with or without the government,” he said as he said the company, however, would be “paralyzed” without the government loan. He stressed that some workers had not been paid for weeks and although there were promises of help from the Workers’ Protection Agency, nothing had been received. Some 600 employees have been working at the shipyard since last week, most on coastal patrols for the Ministry of Defense and another new building, but most of the 1,500 employees have been laid off since production ceased in April.
There was a rumor that a solution had been found with the government, but last week the finance minister said the situation was still being analyzed due to the technical, legal and financial implications of securing the shipyard’s request. The shipyard notes that it was profitable in 2021, but that its financial situation is complicated by EU restrictions. The courtyard was privatized by the government to comply with EU restrictions when the country joined the EU in 2013 and the government is now unsure of the level or form of support it is allowed to offer.
In April, unpaid company suppliers asked the court about the conditions for filing for bankruptcy. However, the shipyard and its parent company filed a pre-bankruptcy petition to delay any creditors’ action, citing claims against Croatia and ongoing talks with the government. Last week the company was forced to resubmit due to an omission in the first filing, while the minister said the filing was complicating an already complex situation.
Brodosplit is not the only shipping company that has been caught in the impact of sanctions. In Norway, Havila Kystruten had arranged to rent its cruises to the Russian financial company GTL, which was also included in the April EU sanctions. Havila’s first cruise, Havila Capellawas temporarily suspended due to issues related to your insurance and ownership of the Russian company, while the shipyard offered a bridge loan so that Havila could receive its second cruise. The company is working on refinancing while seeking exemptions from the Norwegian government.